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    NewsDIGEST march 30, 2010    
          in this edition      
    1. headlines
2. alfi past events
3. alfi events
4. luxembourg for finance events
5. other events



CESR: FAQ on credit rating agencies

The new regulation on credit rating agencies was published on 16 September 2009 (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:302:0001:0031:EN:PDF) and entered into force on 7 December 2009. CESR now issued a document including questions and answers (http://www.cesr.eu/popup2.php?id=6490 ), to provide clarity to market participants in a quick and efficient manner. The responses do not contain standards, guidelines or recommendations, and therefore no prior consultation process has been followed.

The FAQ document will be updated regularly. After each question an indication of the date of its first publication (or latest amendment) will be included to ease the identification of the new Q&A.

CESR Members meet regularly to discuss the questions that have been raised by competent authorities and market participants. Market participants that have identified a question of general importance may send it directly to the relevant competent authority they deal with or to the CESR secretariat (secretariat@cesr.eu). Furthermore, CESR would welcome feedback from market participants on those issues already identified in the document as common positions among its members. The frequency of the future publications will depend on the number of new questions identified and the time it takes to analyse the issues raised and to find common positions.

The German Federal Ministry of Finance published supplementing and clarifying amendments to the BMF-Circular dated 18 August 2009

Income equalisation

The German Federal Ministry of Finance confirmed through a letter dated March 9, 2010 that income equalisation is “carried out effectively” for German domestic and foreign investment funds even if calculated for tax purposes only as far as the following criterias are met:

  1. Income equalisation must be calculated continually on interim profit as well as distributed, respectively deemed distributed income;
  2. A retroactive calculation started after the financial year end is not allowed;
  3. The income equalisation has to be shown as a separate figure of the tax reporting according to Article 5 Investment Tax Act (ITA);
  4. The auditor certificate (“Berufsträgerbescheinigung”) has to include at the information that income equalisation was calculated for tax purposes.

Thus, the unfavourable regime regarding the acceptance of income equalisation in case of foreign funds, as included in the current version of the circular, has been abolished. Income equalisation does not need to be shown in the annual reports of foreign funds in order to be accepted for tax purposes.

Interim Profit & income equalisation

Consequently, income equalisation calculated for tax purposes only will now be seen as a condition for the recognition of interim profit as negative income. This ensures a playing level field for German domestic and foreign funds.

Furthermore, ALFI will increase its efforts to clarify in close cooperation with the German tax authorities the remaining open issues:

  1. Grandfathering rules for the supplementing and clarifying amendments with regard to the BMF-Circular dated 18 August 2009;
  2. Specifying details of the presentation of the income equalisation within the tax reporting figures according to Article 5 ITA;
  3. Specifying how to treat adjustment items (“Ausgleichsposten”).

For further details please read the letter (PDF) from the German Federal Ministry of Finance.

BaFin introduces short selling disclosure regime

On 4 March 2010 the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) issued a general decree introducing a short selling disclosure regime in Germany. The disclosure regime will come into force on 25 March 2010 and will end on 31 January 2011. It applies to net short positions held in the shares of a number of financial institutions which had already been subject to a general prohibition of naked short sales that expired on 31 January 2010.

The disclosure regime is based on the proposal set out in a report of the Committee of European Securities Regulators (CESR) published on 2 March 2010. It provides a two-tier system for the disclosure of significant net short positions in the aforementioned shares.

The decree is addressed to holders of a net short position being an individual, a legal entity or an investment fund. A net short position is given if the balance of all financial instruments held by a person leads to an economic exposure to a particular share which is comparable to a short sale position in such share.

When the net short position reaches, exceeds or falls below 0.2 per cent of the issued share capital, the position holder is obliged to make a private disclosure to BaFin within one trading day. If the position reached a second-tier threshold of 0.5 per cent, the position holder is required to make also a public disclosure on a no name basis via BaFin. BaFin will publish these disclosures on a no name basis on its website.

Moreover, for both, the private and the public disclosure requirement, steps of 0.1 per cent are used as incremental threshold bands to trigger further disclosure obligations in case of a change of the net short position after the initial disclosure (either exceeding or falling below the 0.1 per cent or 0.5 per cent threshold).

Press release

CSSF: Impact study of the financial industry on the Luxembourg economy (French only)

Based on 2008 figures. Download the full study here (only available in French).

IFBL - Training in Islamic Finance: Foundation Certificate and New Advanced Modules (Diploma)

Islamic Finance in Luxembourg continues to gain ground as an attractive alternative to conventional finance. The framework in Luxembourg makes it an attractive centre for Islamic Finance in Europe, whilst the authorities and key market players continue to drive and support the development of this activity.

Read more and download the registration form (PDF).

ALFI Recommendations: NAV calculation on closed/half-closed business days that are not public holidays in Luxembourg – March 2010

Read ALFI’s recommendation (PDF).

Luxembourg for Finance Mediawatch

Read the latest LFF Mediawatch for:

  • Relevant news for the Luxembourg financial centre
  • Financial centre media coverage
  • Financial centre coverage by country
  • Statements about Luxembourg
  • Financial centres monitoring

Download the latest LFF mediawatch (PDF).

European Commission consults on possible changes to the Capital Requirements Directive

The European Commission has published a consultation paper entitled “Possible further changes to the Capital Requirements Directive” (CRD). It is aimed at strengthening the resilience of the banking sector and the financial system as a whole. The proposed changes (a.k.a. “CRD IV”), relate to seven specific policy areas, most of which reflect commitments made by G20 leaders at summits in London and Pittsburgh during 2009.

  • Introducing liquidity standards that include a liquidity coverage ratio requirement underpinned by a longer-term structural liquidity ratio.
  • Raising the quality, consistency and transparency of the capital base.
  • Introducing a leverage ratio as a supplementary measure to the Basel II risk based framework based on appropriate review and calibration.
  • Strengthening the capital requirements for counterparty credit risk exposures arising from derivatives, repos and securities financing activities.
  • A countercyclical capital framework that will contribute to a more stable banking system and help dampen economic and financial shocks.
  • The Commission is consulting on appropriate measures to deal with the risk posed by systemically important financial institutions.
  • Following the Commission’s commitment to create a single rule book in Europe, the Commission is consulting on areas where more stringent requirements might be necessary. The Commission is also consulting on the appropriate prudential treatment of real estate lending.

The purpose of the CRD (2006/48/EC and 2006/49/EC) is to ensure the financial soundness of banks and investment firms. Together they stipulate how much of their own financial resources banks and investment firms must have in order to cover their risks and protect depositors.
The deadline for comments on this consultation is 16 April 2010. The feedback to the consultation will feed into a legislative proposal scheduled for the second half of 2010. FAQs and press release.

New compromise proposal for Alternative Investment Fund Managers Directive

The Presidency of the Council of the European Union has published a new Compromise proposal (dated 1 March 2010) relating to the European Commission's proposal for an Alternative Investment Fund Managers Directive. The new proposal contains a mark-up of the changes that are proposed.

Report on the Alternative Investment Fund Managers Directive

The General Secretariat of Council has also published a report (dated 26 February 2010) on the proposal for Alternative Investment Fund Managers Directive which was addressed to the Permanent Representatives Committee.

CESR recommends the European Institutions introduce a pan- European short selling disclosure regime

On 2 March 2010, CESR submitted a report as technical advice to the European Institutions and recommended the introduction of a pan-European disclosure regime for net short positions in shares. Those CESR Members that already have powers to introduce a permanent disclosure regime, as elaborated in the report, will begin the process of implementing this regime. Those CESR Members who do not have the necessary legal powers will aim towards implementing this regime on a best efforts basis, until an EU regime is adopted.

Following the recent financial turmoil, it was widely recognised that for a short selling disclosure regime to be efficient and to ensure transparency for market participants, a convergent pan-European regulatory approach is necessary.

By proposing a pan-European harmonised disclosure regime for short selling to the European Institutions, CESR seeks to enhance supervisory convergence, improve market transparency and promote market efficiency and integrity. CESR will continue to work in the coming months on this issue, to ensure greater clarity on the technical details necessary to implement such a regime.

CESR protocol on the operation of MiFID database

The Committee of European Securities Regulators (CESR) has published a document entitled “Protocol on the Operation of CESR MiFID Database”. Under the market transparency regime of the Markets in Financial Instruments Directive (MiFID) certain information relating to shares admitted to trading must be made available to market participants. The regime requires CESR members to make calculations in connection with shares admitted to trading on a regulated market, and to some extent “liquid shares”. The results of these calculations will be published by CESR. The protocol is designed to facilitate harmonised calculations and the publication of such information. It describes the tasks and responsibilities of CESR members and the CESR Secretariat and contains practical guidance on how to conduct the calculations.

International regulators publish systemic risk data requirements for hedge funds

The Technical Committee of the International Organization of Securities Commissions (IOSCO) has published details of an agreed template for the global collection of hedge fund information intended to assist in assessing possible systemic risks arising from the sector. The template is designed to allow the collection and exchange of consistent and comparable data between regulators and other competent authorities in order to facilitate international supervisory cooperation in identifying possible systemic risks in this sector. IOSCO is of the opinion that participants are best monitored through their trading activities, the markets in which they operate and funding and counterparty information, amongst others.

OECD on Corporate Governance and the financial crisis: Conclusions and emerging good practices to enhance implementation of the Principles

This report builds on the report “Corporate Governance Lessons from the Financial Crisis" and the subsequent report “Corporate Governance and the Financial Crisis: Key Findings and Main Messages”.

The OECD Steering Group’s first two reports found that corporate governance weaknesses in remuneration, risk management, board practices and the exercise of shareholder rights had played a key role in the development of the financial crisis and that these weaknesses extended to companies more generally. The Steering Group also found that the OECD Principles of Corporate Governance provided a good basis to address the main concerns that had been raised. This report with its conclusions and emerging good practices is designed to assist companies and policy makers in implementing the OECD Principles more effectively. The conclusions and emerging good practices are complementary to the OECD Principles.

Spain approves new tax exemptions over dividends paid to certain EU Collective Investment Schemes and Pension Funds

TOn Tuesday, 2 March 2010, the Spanish Official Gazette published the Law 2/2010 of 1st March 2010, implementing certain EU Directives on indirect taxation and modifying Non Resident Income Tax Law (hereinafter, Law 2/2010).
Read more



ALFI past events

ALFI Spring Conference

The 2010 Spring Conference in Luxembourg proved again a success, with nearly 700 registrations and 47 exhibitors.

This year’s event concentrated on investor protection, new developments within the infrastructure, on latest developments within the Islamic Funds and ETF scene, and last but not least on recent regulatory changes.

On the evening of the first day of the Conference, 350 invitees had accepted our invitation to the Gala Dinner at the Philharmonie Concert Hall.

ALFI Microfinance Conference

With more than 160 experts on hand from a variety of fields, attendance at the Microfinance Conference demonstrated once again the great interest in Microfinance.

This event has reinforced the determination of ALFI to intensify its efforts in this area and make this conference a recurring event of its agenda.

In his introductory speech, H.E. Minister Luc Frieden recalled the strong involvement of Luxembourg in the field of Microfinance and the Government’s support for many initiatives including the public-private partnership that gave birth to the “Luxembourg Microfinance Development Fund”.

25 February : ALFI & PRiM Risk Management Conference

Over 200 people attended the successful risk management conference at the Chambre de Commerce. The market turmoil which started in 2008 has clearly demonstrated how important it is to have an effective risk management policy. Both, the Luxembourg Association for Risk Management Professionals (“PRiM”) and the Association of the Luxembourg Fund Industry (“ALFI”) made valuable contributions to the development of sound risk management procedures over the past years. The conference concentrated on asset and risk management in these turbulent times with a specific focus on liquidity and market risk management . Other highlights of the program included the changing role of the Custodian Bank, the CESR and CSSF Circular 07/308- legal overview, and UCITS IV regulatory risk management impact.



ALFI events

12 - 15 April: ALFI US Roadshow

Seminars will take place in San Francisco, Chicago, Boston, Greenwich and New York. Participation is free of charge.

Download the invitation and programme.
Download the registration form.

5 May: ALFI Washington cocktail reception

On the occasion of the ICI General Membership Meeting (5-7 May), ALFI will hold its annual Washington cocktail reception at the Luxembourg Embassy from 6 pm to 8 pm with the kind support of HE Jean-Paul Senninger. If you are attending the conference http://gmm.ici.org and would like to receive a formal invitation, or if you have contacts/clients in Washington you would like ALFI to invite to this reception, kindly complete the reply form and return it to registrations@alfi.lu by Friday 16th April.

Download the reply form (PDF).

11 May: ALFI Roadshow London

The invitation and registration form will be available on this link soon: http://www.alfi.lu/index.php?id=61

18 June: ALFI AGM

Attention: date has been changed (was 17 June before).

28 & 29 September: ALFI & NICSA Conference

The conference committee has started putting together the programme and exhibition & sponsorship opportunities will be sent out after the Spring conference.



Luxembourg for Finance Events

13 April: Moscow seminar

The City of Moscow and Luxembourg for Finance have the pleasure to invite you to the seminar « Moscow and Luxembourg, a Partnership for Financial Services Centres » to be held on Tuesday, April 13, 2010 at 10:00 a.m. at:

President Hotel 24 Bolshaya Yakimanka Street
119134 Moscow

Download the programme and registration information in English or Russian.

3-5 May: Bahrain, Islamic Financial Services Board Summit

Luxembourg for Finance is a sponsor at the 7th Islamic Financial Services Board Summit to be held in Bahrain from May 3 to 5, 2010.

If you are interested in a participation, please return the enclosed form directly to the organizer and a copy to Luxembourg for Finance (Ms Sophie Henry, fax: 27 20 21 399 or sophie.henry@lff.lu).

Download the invitation letter (PDF).
Download the registration form (PDF).

16-19 May: mission to the Kingdom of Saudi Arabia

The Ministry of the Economy and Foreign Trade in close cooperation with the Chamber of Commerce and the Agency Luxembourg for Finance will organise a trade mission to the Kingdom of Saudi Arabia. H.R.H. Prince Guillaume, Crown Prince of Luxembourg and HE Mr Jeannot Krecké, Minister of the Economy and Foreign Trade, will lead the delegation from 16 to 19 May 2010 to Riyadh and Jeddah, where seminars on the Luxembourg industrial and financial sectors will be organised. Each seminar will be followed by a walking lunch offering participants possibilities for networking.

Luxembourg for Finance has planned to organise a financial seminar in Riyadh to which you have the possibility to act as a sponsor. In Jeddah, a financial presentation will be included in the general economic seminar. In case your organisation would be interested in joining this official mission, we would be very grateful if you could return the enclosed pre-registration form directly to Luxembourg for Finance before March 30, 2010 (Mr Sohrab Ziai, fax: 21 20 21 399 or sohrab.ziai@lff.lu).

A more detailed agenda and the final registration form will follow as soon as possible.


Invitation letter (PDF).
Preliminary programme (PDF).
Pre-inscription form (PDF).



Other events

3 June: Luxembourg Financial Forum «Sustainability in Finance: Implementation of an Idea »

In accordance with its tradition and standing as a first-class financial centre Prime Minister Jean-Claude Juncker will be hosting the Luxembourg Financial Forum for the fifth time.

This year, on 3 June 2010, renowned speakers and experts will discuss about:

Sustainability in Finance: Implementation of an Idea(l)

Read more about this event (PDF).

If you do not wish to receive information from ALFI anymore, send an email to info@alfi.lu.